OPEN SECRETS OP-ED
Prasa’s legacy of whistle-blower victimisation and corruption cover-ups is off the rails
In its final report, the Zondo Commission concluded that it is unlikely that the Passenger Rail Agency of South Africa will recover without urgent interventions to arrest a culture of whistle-blower victimisation and corruption cover-ups. Unfortunately, whistle-blowers continue to be targeted within Prasa, and there is little evidence of effective reform. The result is that working-class commuters continue to be let down by failing infrastructure and almost non-existent rail services.
South Africa’s rail system is a mess. A central reason for this is more than a decade of systemic corruption at the Passenger Rail Agency of South Africa (Prasa).
The Zondo Commission dedicated numerous weeks of hearings to allegations related to Prasa, and its final report includes 240 pages picking apart the evidence. The commission highlighted two major themes that explain the decline of the rail agency.
The first was a chronic lack of compliance with procurement regulation, in that many individuals who were associates or relatives of executives or other influential individuals unduly benefited from billions of rands worth of corrupt or irregular Prasa contracts.
Open Secrets has just released an investigative report – Wanted: The State Capture Conspirators. The report examines in detail some of the largest corrupt contracts at Prasa. The report makes the case that a host of individuals and companies can and should be urgently prosecuted by the National Prosecuting Authority (NPA).
Accountability for those implicated is one vital part of cleaning up Prasa, but there is a second important element that must be addressed.
The second theme that emerges from the Zondo Commission’s report is a pattern of whistle-blower victimisation, where “a few men and women tried to resist this [corruption] and insist on compliance” at Prasa were “unfairly dismissed, suspended or lives made difficult”.
Prasa – under its new board headed by Leonard Ramatlakane – says that it is reforming and rebuilding after years of instability. However, the Zondo Commission warns of worrying signs that the new board is “harking back to the Montana style of leadership”, adding that “it is unlikely that Prasa will recover” without intervention.
Among the signs the report is referring to, is the new board’s decision to fire and sue Prasa whistle-blower Martha Ngoye for R45-million, and fire long-time executives Tiro Holele and Zolani Matthews – Prasa’s first permanent CEO in six years.
It has also been dropped by law firm Werksmans as its lawyers on the eve of important litigation regarding setting aside corrupt contracts which cost Prasa billions due to non-payment. These decisions appear to reflect the continuation of an entrenched culture of whistle-blower victimisation, opaque governance and corruption cover-ups at the state-owned railway company.
CEO Montana ‘ruthlessly’ abuses his power
In her 2015 investigation into Prasa, Derailed, then Public Protector Thuli Madonsela confirmed a pattern of unfair dismissals and heavy-handed leadership style from then CEO Lucky Montana.
She found that Montana unlawfully terminated five executives’ contracts between 2009 and 2013 – no disciplinary procedure was followed – resulting in R5-million in irregular expenditure from labour dispute settlements.
The Derailed report gave an idea of how Montana would treat those who got in his way; however, it was only at the Zondo Commission that the public heard detailed allegations of his tyrannical leadership style and the impact it had on whistle-blowers.
Prasa’s evidence stream was first introduced at the Zondo Commission in March 2020. Three Prasa executives testified – Tiro Holele, Martha Ngoye and Fani Dingiswayo – as did former Prasa board chairperson Popo Molefe.
They presented evidence that revealed how Prasa was captured by a network of politically connected businessmen enabled by Montana, a group of executives and the board of control (BOC), as documented in Open Secrets’ Unaccountable series. The testimony revealed how corruption and maladministration became institutionalised within the procurement process during Montana’s reign from 2009 to 2015.
Fani Dingiswayo, a former executive in the legal risk compliance department at Prasa, testified that Montana “ruthlessly abused his power” as Prasa GCEO.
Dingiswayo alleged that Montana used arbitrary suspensions and dismissals, creating a climate of fear which made executives turn a blind eye to procurement irregularities, blatant corruption and maladministration.
Dingiswayo was one of the few executives who spoke out against corruption at Prasa during Montana’s six years as GCEO. In early 2015, Dingiswayo picked up serious irregularities in the extension of a contract with Prodigy Business Solutions, a company linked to politically connected businessman Roy Moodley. Moodley was said to have extensive influence over Prasa’s internal affairs, largely through his relationship with Montana and a select group of executives.
When Dingiswayo raised these serious procurement irregularities with Montana, he was called into Montana’s office late one evening and accused of “working against the interests of Prasa”.
After Dingiswayo tried to protest his innocence, Montana allegedly stated:
“No, I don’t want to hear anything from you … All I brought you here to tell you is that you no longer work here … We can talk about how much I pay for you to leave your employment.” After Dingiswayo told Montana that he was not interested in having that discussion, Montana fired him on the spot.
The next day, on 19 May 2015, Dingiswayo’s boss in the legal risk department, Martha Ngoye, called Montana in an effort to understand why Dingiswayo had been fired so abruptly. She told him that he should go through her first, because Dingiswayo’s actions were sanctioned by her. Ngoye asked to have a meeting with Montana to iron out the issues, according to her affidavit submitted to the Zondo Commission.
“The meeting started by 18:00. By 18:05, Mr Montana told me he was dismissing me with immediate effect. I received my dismissal letter on 20 May,” Ngoye testified.
Popo Molefe had replaced Sfiso Buthelezi as board chair at this time, in an effort to transform the deeply compromised parastatal. Molefe rejected the dismissals but despite this, Montana still placed Ngoye on suspension until August 2015.
Montana defended these actions at the Zondo Commission, arguing that labour laws allowed for summary dismissal “when you think a lot is at stake”, and that Dingiswayo and Ngoye were working against the interests of Prasa.
The commission did not make a final conclusion on this specific evidence, but its final report summary on Prasa said:
“Those … pursuing acts of maladministration and corruption at Prasa were so determined not to be disturbed in their agenda that when a few men and women tried to resist this and insist on compliance, they were unfairly suspended, dismissed or their lives made difficult.”
A brief transformation
The Public Protector’s 2015 report, Derailed, instructed the National Treasury to commission independent forensic investigations into all contracts entered into by Prasa worth more than R10-million between 2012 and 2015.
These investigations, along with those undertaken by law firm Werksmans at Prasa’s request, concluded that several large contracts were tainted by corruption and should be set aside. Of 216 contracts worth about R15-billion that were investigated, only 13 were above board.
Molefe’s new board acted swiftly, taking two megatenders – the Swifambo tall trains contract and Siyangena Technologies contracts – to court. These contracts, worth more than R8-billion combined, were declared corrupt and set aside by the South Gauteng High Court and the North Gauteng High Court in 2017 and 2020, respectively.
The court cases were major victories for Prasa, preventing billions in public funds from being lost to corruption. Ngoye and Dingiswayo – who were reinstated after Montana left – played an integral role in these court proceedings as part of Prasa’s legal team.
In 2017, Molefe’s board also successfully took the Hawks to court for failing to investigate the corruption in relation to the Swifambo and Siyangena contracts, after it became clear that law enforcement was stalling.
The cover-up: Silencing whistle-blowers and corruption-busters
These were significant steps to bring about both accountability and transparency. However, instead of supporting the board’s attempts to address the corruption and maladministration documented in the forensic reports, the new board had no political support.
The Department of Transport and its minister, Dipuo Peters, attacked Molefe’s board for the amount of money they spent on the investigations. This culminated in Peters firing the entire Molefe board in early 2017. Molefe’s board successfully overturned the decision in court, allowing it to finish its term.
Then president Jacob Zuma appointed Joe Maswanganyi in March 2017 to replace Peters. Molefe testified at the commission that Maswanganyi continued where Peters had left off, isolating the board by leaving vital positions empty until their term expired at the end of 2017.
Molefe wrote to Parliament in early 2017 requesting an urgent parliamentary investigation into corruption and governance issues at Prasa, following the finalisation of the Werksmans and Treasury reports.
The parliamentary committee on transport, led by chair Dikeledi Magadzi, initially shelved the proposed inquiry. However, on 14 November 2017, the committee suddenly called a hearing to discuss corruption at Prasa. Railway activist coalition #UniteBehind attended the meeting and reported that the minister and the committee were more interested in targeting investigators than addressing corruption at Prasa.
#UniteBehind was so concerned about what happened in that hearing that it submitted a report to the Standing Committee on Public Accounts and the Finance Committee in Parliament. In it, the coalition described the meeting in the following terms: “The Transport Minister, egged on by the Committee Chairperson Dikeledi Magadzi, wanted to focus on the investigators [Werksmans] hired by former board chairperson Popo Molefe, rather than on Sfiso Buthelezi and the billions lost to corruption… The Transport Committee appeared to start a whitewashing process that would target those wanting to expose corruption and weaken or conceal the findings of the Treasury Investigations.”
The minutes from the November 2017 meeting show how Maswanganyi, Magadzi and other ANC members on the committee chose to focus on Werksmans and Prasa’s board, attacking the decision to hire private investigators which they argued Prasa could not afford, and did little to interrogate the serious evidence of corruption. Notably, one of the ANC members on that committee was current Prasa board chair Leonard Ramatlakane.
Back to the old ways: Mpondo’s appointment
In 2018, Fikile Mbulula was appointed Minister of Transport. Instead of stabilising Prasa by appointing a permanent CEO and board, he appointed Bongisizwe Mpondo as the sole administrator and accounting officer in November 2019. Mpondo would act as both the CEO and the entire board.
#UniteBehind took the decision to court, and Mpondo’s appointment was overturned in the Western Cape High Court in August 2020. The day before the court ruled his appointment was unlawful, Prasa made Mpondo a permanent employee and paid him R3.17-million – more than R600K a month – according to a 2020 amaBhungane investigation.
In his fiery resignation letter leaked to the public in early 2021, Prasa legal executive and whistle-blower Fani Dingiswayo wrote that “those who understand the law … knew that this decision [the appointment of Mpondo] was unlawful and had no prospects of saving Prasa”.
The scathing exit letter accused Mpondo of continuing where Montana left off by “unlawfully suspending about 20 employees, including me”, and “appointing people without a process that was open and transparent, including people with known associations to Mpondo.”
Dingiswayo wrote that although leaders like Mpondo and current board chairperson Ramatlakane speak out against corruption in public, “the true corruption-busters are loathed and insulted every day by those who seek to hide the historical corruption at Prasa”.
“There are a number of employees holding the broken pieces of Prasa together. They are everywhere in the organisation. They are united for their unreserved love for the railways in general and Prasa in particular. The corrupt love to hate these people … these people are hounded like prey with the sole intention of driving them out of the organisation,” Dingiswayo said in his exit letter.
Old habits die hard
In October 2020, Mbalula appointed a new board to lead Prasa after Mpondo’s appointment was declared unlawful by the courts. Leonard Ramatlakane was elected as Prasa’s board chairperson. As already discussed, Ramatlakane was part of the Transport Portfolio Committee in Parliament which ignored the independent forensic reports and frustrated the accountability processes pushed forward by Popo Molefe’s board.
Ramatlakane and the BOC have, in many ways, continued where Mpondo and Montana left off; publicly criticising Prasa employees who testified at the commission, and trying to fire the whistle-blowers.
Months into their appointment, Ramatlakane announced that Martha Ngoye, Tiro Holele and two other Prasa executives had been fired for overstaying the terms of their contracts. This came eight months after Ngoye and Holele testified at the Zondo Commission. Prasa’s board also accused Ngoye of unlawfully approving a payment of R58-million to a company called SA Fence and Gate, which Prasa had contracted to supply lighting.
The executives successfully overturned their dismissals in the Johannesburg Labour Court in March 2021. Prasa appealed but were unsuccessful, with acting judge Moses Baloyi describing Prasa’s reasoning as “grossly misconceived”.
Her dismissal did not stop Ngoye from continuing to speak out on how whistle-blowers were victimised at Prasa.
After the Labour Court judgment, Ngoye appeared at the Zondo Commission one last time to respond to accusations levelled at her by ex-GCEO Lucky Montana. She requested that an “affidavit on the plight of whistle-blowers” be submitted as evidence. Ramatlakane’s board attempted to block her affidavit, arguing in a submission that it was out of the Commission’s jurisdiction. Zondo disagreed and admitted it as evidence.
In the affidavit, Ngoye, like Dingiswayo, alleged that individuals who testified at the Commission were “regarded as villains by the main actors [at Prasa]” and were “pushed out of their jobs for the stance they took on State Capture”.
Ngoye added that many of these whistle-blowers struggle to find jobs when they leave state employment because “capture is collusion between the public and private sector”, leaving them financially isolated for their opposition to corruption.
“This is where I find myself. Unlawfully dismissed by Prasa, being smeared by Prasa, and Prasa doing all to ensure I am financially frustrated, including refusing to pay my leave pay.”
The affidavit details how Ngoye has been targeted at Prasa for her resolute position on corruption, and how the current board under Ramatlakane has continued to use Montana’s strategy of arbitrarily firing and suspending officials who question the status quo. The board then uses millions in public funds to defend these unlawful dismissals in court.
Ngoye states that the narrative Ramatlakani’s board used to dismiss her relied “on lies that are peddled by the discredited Lucky Montana on Twitter and not in these formal reports”.
Ngoye was vindicated in a recent arbitration judgment between Prasa and SA Fence and Gate, which she initiated when she was the head of legal at Prasa. SA Fence and Gate, rather than Ngoye, was ordered to pay R45-million back to Prasa after the arbitrator found it had failed to supply lighting for that amount. This judgment undermined the reasons given for her dismissal by the board.
Despite this, two months after Ngoye appeared at the Zondo Commission to protest Prasa’s treatment of her and other whistle-blowers, a GroundUp article reported that Prasa was suing Ngoye for R45-million. The suit alleges that Ngoye effected an irregular payment for the SA Fence and Gate contract while she was acting GCEO in 2015 – despite the arbitration judgment clearing her of wrongdoing.
Ramatlakane submitted an affidavit to the Zondo Commission defending the board’s decision to fire Ngoye and Holele, this time alleging that it was because they were involved in the procurement process for the corrupt Swifambo locomotive contract. This is disputed by Ngoye and Holele, and the report does not come to a conclusion regarding the matter, on the basis that the allegations were made too late for the Commission to interrogate them.
The commission does, however, call for a criminal investigation into everyone who is alleged to have signed off the Swifambo contract, including Ngoye and Holele.
Crucially, the Zondo Commission also found that the board likely acted unlawfully in targeting the executives in question. The final report notes the scathing Labour Court judgment following the unfair dismissals of Ngoye, Holele and Matthews.
It states that Ramatlakane’s board “appears to have acted without care in causing expenditure arising from the dismissals of the three executives in early 2021 and in opposing their court applications” without merit.
The report indicates that the money spent on dismissing the executives could be classified as a violation of section 51 (1) (b) (ii) of the Public Finance Management Act, which details the responsibility of preventing wasteful expenditure.
The board has chosen to use Prasa’s seemingly limited funds to fight Prasa’s whistle-blowers in the Labour Court, including through the appeals process. At the same time, it failed to pay Prasa’s lawyers at Werksmans on the eve of the hugely important Siyangena court case appeal, which is due to be heard in the Supreme Court of Appeals this year.
This failure led to Werksmans withdrawing as Prasa’s lawyers in the matter. Siyangena is hoping to overturn the high court judgment which set aside its contract with Prasa, and Prasa is on record as exploring a settlement with Siyangena on the matter, despite receiving a legal opinion urging them not to do so.
Taken together, the conduct of Prasa’s new board casts serious doubt on its assurances to the public that it is getting itself back on track and dealing with legacy issues of corruption.
Any talk of reform at the parastatal needs to address the systemic culture of whistle-blower victimisation and corruption cover-ups that have been deeply embedded in its governance framework, first by Montana and then perpetuated by Parliament, various transport ministers – including Peters and Mbalula – the administrator, the director-general of transport and, most recently, by the board chaired by Leonard Ramatlakane.
Without these necessary reforms, Prasa will not be able to tackle its core mandate of delivering functioning rail services. Working-class commuters will continue to be stranded and forced to bear the cost of more expensive forms of public transport. DM
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